ARCA responds to late payment grace period changes

Damian Paull

Damian Paull

Commonwealth Attorney-General, Senator the Hon George Brandis QC, has today requested the Credit Reporting Privacy Code (CR code) be varied so that the five day grace period for late payments recorded on a consumer’s credit report is extended to 14 days.

As the CR code developer, ARCA will make an application to the Office of the Australian Information Commissioner to vary the CR code, which went live following the start of comprehensive credit reporting in Australia on 12 March.

“Given the concerns raised by the community and reflected by the Attorney General on this matter, we agree that a 14 day grace period is an appropriate compromise before a late payment is recorded as Repayment History Information,” ARCA CEO Damian Paull said.

Comprehensive credit reporting features the inclusion of Repayment History Information which shows payments which were made or missed for each month over a 24 month cycle on a consumer’s credit report.

Understanding the difference between late payments and defaults

Repayment History Information helps improve the accuracy of predicting the credit risk of consumers, which will help lenders meet their responsible lending obligations. Ultimately, comprehensive credit reporting will ensure more consumers get better access to credit.

“It’s important consumers understand the difference between late payments and defaults,” Mr. Paull said.

“One late payment on your credit report is less serious than a default.  Any of us can be on holidays or forgetful, and a late payment can be offset by an overall positive history of paying most accounts on time. Defaults on the other hand are always more serious,” he said.

As of 12 March 2014, defaults can only be recorded on your credit history if the payment is more than 60 days overdue, is for a debt of more than $150, and you have received written notifications prior to the listing of the default.

“It’s also important for consumers to understand that only credit providers with an Australian credit license can report and obtain Repayment History Information – so late telecommunications or utilities bills will not be included on your credit report,” Mr Paull said.

ARCA has developed to help consumers navigate the changes to the credit reporting regime and understand their new consumer rights.

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